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Alaska Oil Shutdown Makes Bad Situation Worse

With a war in the Mideast still raging, and threats from Iran regarding its being sent a rebuke by the UN Security Council, the news for energy consumers hasn`t been good. And now, as if Americans aren`t already facing an energy crisis due to high oil and gas prices and record heat waves from coast-to-coast, it was announced on Sunday that almost half of the oil transportation operations on an Alaskan North Slope line was shut down after severe corrosion was discovered. The problem was found in a Prudhoe Bay oil transit line. BP Global was the exploration group that discovered the corrosion.

The estimated fall in production is pegged at 400,000 barrels a day - or 8% of the nation`s total. As BP America officials announced that a cleanup had been undertaken for a related spill of an unconfirmed four or five barrels of crude oil (a barrel is reported to contain 42 gallons of oil), financial analysts were busy predicting the aftermath and overall effects of a major shutdown of this sort. In Tokyo, Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures Ltd, said "Oil prices could increase by as much as $10 per barrel given the current environment."

According to the U.S. Energy Information Administration, the North Slope`s shutdown is expected to end, with production to resume after a few days. BP America Chairman and President Robert A. Malone said, "We apologize to the nation, and the state of Alaska, for the adverse impacts it will cause." Until BP America and U.S. government regulators are satisfied with repairs enough that they determine the line can run safely without posing any threat to the environment, the Prudhoe Bay transit line will remain shut down.